Four months of turmoil upend dairy industry

FOUR months ago the dairy industry was a different beast. By SIMONE SMITH
Share on twitter
Share on facebook
Share on linkedin
Share on whatsapp
Share on email

Rain was hard to come by across most of Victoria, feed prices were high, and the average weighted milk price was $5.60 a kilogram of milk solids.
That was down from the forecast $6.05kg/MS promoted by Australia’s largest milk processor, Murray Goulburn, but farmers knew that price was fanciful as they watched oversupplied global markets.
A drop in price earlier in the season wasn’t welcome, but farmers could see what was going on around them. Others, in positions of responsibility, apparently, didn’t have the same awareness.
That was borne out on April 22, when Murray Goulburn requested an Australian Securities Exchange trading halt. With MG boss Gary Helou, just a few days earlier, raising the prospect of the farmgate price still hitting $6/kg by season’s end, it surely couldn’t be a price drop.
How wrong they were. Five days later MG dropped a bombshell. It cut the farmgate price to $4.75-$5kg/MS, downgraded its profit forecast and introduced a complex loan scheme to maintain cashflow to farmers at the expense of their farmgate milk price for the next three years.
Fonterra, National Dairy Products and Lion also cut their prices.
At least it had began to rain.
Dairy has never been more talked about. Murray Goulburn has become a household name, but for all the wrong reasons. Luckily its products are sold under the Devondale brand.
Consumers are acutely aware, and are using their purchasing power to show they care. Cheap house-brand milk is being left on shelves as consumers seek branded milk to “help the farmers”. There are calls for a 50-a-litre levy on fresh milk.
Lawyers circle to ensure farmers receive compensation while the ACCC and ASIC reassure farmers and investors they will get to the bottom of it all. MG units plunged on April 27 from $2.14 to $1.24. Within weeks they were down to 85c. On Monday they were still below $1.50.
Dairy farmers are switching processors, some of which have waiting lists.
Dairy cows have swamped saleyards. At least there are record beef prices to soften the blow.
This cashflow, and any government assistance, will be the dairy farmers’ income, with milk prices now below production costs.
Farm workers are being reluctantly laid off. Every cost has been cut, recut and then cut again.
Opening milk prices for the July 1 season has brought g new anger. Some seasonal suppliers will have an income of less than $4kg/MS.
Calls for the MG board grow louder but are ignored.
The wider community has begun to feel the pinch. Farmers have stopped spending.
Local communities are rallying to support farmers who underpin large chunks of regional Victoria.
Farmers are now considering diversification. Beef bulls look more attractive for joining. Rearing calves on dairy cows is more viable, for some, than milking. Young heifers attract more for slaughter than restocking or export. Milk production is on the slide.
Then last week MG announces a net profit of $40.6 million and dividend.
Global milk supply is retracting. O, with online auctions having risen twice in a row. New Zealand’s Fonterra, has upped its price for its Kiwi suppliers.
On the farm it continues to rain. Dams overflow, irrigation water prices drop, paddocks are pugged and soil moisture profiles improved.
Pasture growth has picked up. Prospects of a fruitful harvest are becoming a reality, with plentiful homegrown feed meaning lower costs.
In a few weeks dairy farmers will start to get some of their lowest milk cheques for the season. Spring milk cheques, on some farms, are expected to be less than 25 cents a litre.
Surviving at an unsustainable price is now a priority.
The optimism that usually comes with a ripper spring is dulled and replaced by financial stress and overall concern about the future of one of Victoria’s largest agricultural industries. A lot sure has changed in four months.
 
Source: WeeklyTimes
Link: http://www.weeklytimesnow.com.au/agribusiness/dairy/four-months-of-turmoil-upend-dairy-industry/news-story/06b64534c0a9da124752968cf96f6cad
 

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

Te puede interesar

Notas
Relacionadas